MAJOR ECONOMIC REFORMS PROPELLS EGYPT TOWARDS A FRUITFUL SUCCESSFUL FUTURE

The ancient land of Egypt is bursting with modernity and FDI opportunities. The government has implemented a series of economic reforms that have helped rank Egypt fourth in FDI investment in Africa.

Nestled snugly in the north-east corner of the African continent, 94% of Egypt’s land is made up of desert. Its major cities, as well as its agricultural and economic activity are concentrated along the extremely fertile banks of the Nile and the river’s delta.

Recently Egypt has introduced a major economic reform programme to improve Egypt’s public finances, these include: the liberalisation of the exchange rate regime, fiscal consolidation measures and reforms to the business environment. The liberalisation of the exchange rate regime is key towards ensuring a competitive economy and the boosting of private sector activity. Between September and November 2016 the government launched the value-added tax law (VAT), a free-floating currency, and implemented fuel and electricity subsidy cuts. This ambitious economic programme has been incredibly successful. The IMF approved a $12 billion, three-year loan for Egypt and released the first $2.75 billion tranche and in July 2017 disbursed the second tranche worth US$1.2 billion. The Fund has praised Egypt’s economic progress, its recently approved investment and industrial licensing laws, as well as a new insolvency law currently in parliament. The World Bank, China and others have also provided funds that have assisted in financing this programme.

The Central Bank of Egypt (CBE) is committed to a price stability mandate and with this in mind on the 3^rd November 2016 they adopted a flexible exchange rate regime securing external competitiveness and foreign exchange reserves while supporting exports and tourism and attracting foreign investment.

Egypt is a very appealing Middle Eastern market for FDI, with investors mainly from Europe, the United States and Arab countries (The UK is the largest investor in Egypt). FDI is concentrated in the oil sector followed by construction, manufacturing, real estate and financial services sectors.

According to a report by the United Nations Conference (UNCTAD) it ranks fourth as recipient of foreign direct investment (FDI) in the African continent – following Angola, Nigeria and South Africa. The energetic growth of the Egyptian economy, its strategic geographical position, low labour costs, skilled workforce, unparalleled tourist a ppeal, its considerable energy reserves, large domestic market and the success of the reforms undertaken by the authorities (including many privatisations) all ensured a very definite increase in FDI. In 2015 there was an emphatic improvement with +49% FDI influx (particularly orientated towards the banking and telecommunications sector). According to the UNCTAD in 2016 Egypt was subject to solid FDI inflow due to the hydrocarbon sector, seeing its net inflow in the first three quarters of the fiscal year (2016-2017) mostly directed into the oil sector.

The economy depends heavily on agriculture, tourism and cash remittances from Egyptians working abroad, mainly in Saudi Arabia and the Gulf countries. Egypt’s foreign exchange reserves have been reinforced with US$6bn from Saudi Arabia, the UAE and Kuwait since President Abdel Fattah Saeed Hussein Khalil el-Sisi came into office since 2014.  Sisi is a determined and resolute leader who encouraged Egyptians to have faith in rebuilding the economy by donating half of his own salary and personal assets to support the economy.